BUSINESS LIVE: Borrowing hits £17.8bn; Herald IT faces Saba vote; EasyJet losses narrow

Mark Crouch, market analyst at eToro:

‘Wetherspoons have served up a lukewarm trading update this morning after rising food and drink sales during the Christmas period were all but watered down due to the rising cost of operations. Despite coming off the back of a record year, the pub operator is facing significant pressure from increasing expenses which has led Wetherspoons’ chairman, Tim Martin, to publicly call out Sir Keir Starmer in the latest trading update, urging a resolution to the “tax discrepancy” surrounding the 20% VAT on food sales.

‘While Wetherspoons has a history of navigating economic challenges, shareholders may be concerned about the company’s performance in a record year as shares were down over 25% from their highs in 2024. This raises the question: If Wetherspoons is struggling now, what will it take—beyond government intervention—to reverse its fortunes? The company may need to consider raising prices, but with the risk of reducing demand, this is something they will likely want to avoid.

‘That said, Wetherspoons is taking proactive steps to address the challenges it faces. The focus on opening new pubs in high-performing areas, particularly major cities and travel hubs, is a sound strategy and in full flow. However, with costs rising, the company will need to become even more efficient in order to keep the wolves from the door.’

BlackRock has revealed an agreement with activist hedge fund Saba Capital it hopes will protect its London-listed investment trusta from the disruption faced by peers.

John Moore, senior investment manager at RBC Brewin Dolphin:

‘EasyJet’s results confirm good growth in sales and an improving picture in terms of profitability – even during the traditionally slower winter period.

‘This is a result of a number of measures coming together for the airline, such as route efficiency, lower fuel costs, and good load factors.

‘Unlike Ryanair, easyJet has a balanced fleet by manufacturer, so the Boeing dispute shouldn’t impact it unduly. That issue, and concerns about post-Budget consumer sentiment, appear to be the only clouds on the horizon – although, forward bookings are robust and the holidays business continues to deliver strong growth.

‘EasyJet should make £10 billion of sales this year and is en route towards £1billion in profits, which are significant milestones for the airline to reach in future updates.”

Joe Nellis economic adviser at accountancy and advisory firm MHA:

‘With public sector borrowing in December coming in higher than expected at £17.81bn, the Chancellor finds herself with even less fiscal headroom than previously thought.

‘Increased borrowing, combined with the recent rising cost of borrowing, has put more intense strain on central government expenditure.

‘While the bond market has calmed in the last week and fears of an emergency mini-budget have subsided, the Chancellor will be very aware of the dissipation of government finances as we head towards the OBR’s Economic and Fiscal Forecast scheduled for 26 March.’

EasyJet saw operating losses narrow in its first fiscal quarter, as the airline was boosted by easing fuel costs, and strong demand for travel and its holiday packages.

Operating losses came in at £40 million for the three months to the end of 2024, compared with £117million a year earlier.

‘Looking to this summer, we have seen continuing demand for easyJet’s flights and holidays where we have one million more customers already booked, with firm favourites like Palma, Faro and Alicante,’ the carrier’s new CEO Kenton Jarvis said in a statement.

Government borrowing came in far higher than expected in December as a result of debt interest and a one-off purchase of military homes, data from the Office for National Statistics shows.

Public sector net borrowing of £17.8billion for the month exceeded market forecasts of £14.1billion and will put further pressure on Chancellor Rachel Reeves’ commitment to her fiscal rules.